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Cleaning up the kitchen sink: Specification tests and average derivative estimators for growth econometrics

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  • Rodríguez, Francisco
  • Shelton, Cameron A.

Abstract

Theory and case-study evidence suggest that non-linearities are pervasive in the growth process. Growth empirics have attempted to characterize these non-linearities with regression trees, additively separable non-parametric estimates, or simple interaction terms. Each method requires specific assumptions about functional form which we demonstrate may not be defensible. We provide two alternate mechanisms for making inference about the growth effects of production–function shifters that do not make a priori assumptions about functional form: monotonicity tests and average derivative estimation. Our results suggest that the growth effects of policies are country-specific while the effects of institutions are more robustly monotonic.

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  • Rodríguez, Francisco & Shelton, Cameron A., 2013. "Cleaning up the kitchen sink: Specification tests and average derivative estimators for growth econometrics," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 260-273.
    • Handle: RePEc:eee:jmacro:v:38:y:2013:i:pb:p:260-273
    DOI: 10.1016/j.jmacro.2013.07.009
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    More about this item

    Keywords

    Economic growth; Cross-country growth regressions; Non-linearities; Non-parametric econometrics;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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